U.K. Government: Shell Oil Leak 'Substantial'

Published August 15, 2011

| Reuters

Royal Dutch Shell's ruptured pipeline in the North Sea has already caused a "substantial" oil spill, with oil still leaking into the sea on Monday, the British government said on Monday.

The Department of Energy and Climate Change (DECC) said: "Current estimates are that the spill could be several hundred tonnes". A spill on that scale would be the worst since 2000 when more than 500 tonnes was spilt, according to DECC data.

Oil from Shell's Gannet field has been spilling into the sea since last Wednesday but the rate of flow has been reducing since the company shut off the well the same day.

A spokesman for Shell on Monday declined to comment on how much oil has leaked.

The spill remains tiny by comparison with the almost 5 million barrels which gushed into the Gulf of Mexico from BP's blighted Macondo well last year.

"Although small in comparison to the Macondo, Gulf of Mexico incident, in the context of the UK Continental Shelf the spill is substantial," a spokesman for DECC said, noting that accurate assessments of the size of a spill is difficult and subject to ongoing revision.

"They (Shell) are working to completely halt any further leakage."

DECC also echoed Shell's expectation that the oil sheen will not reach the shore, as it is being dispersed naturally by waves. Shell has equipment and despersant on standby which it said it will use if required.

Shell's shares were trading up 0.6 percent to 2,020.5 pence at 1339 GMT, marginally lagging the European index of oil and gas companies which was 0.9 percent higher.

"We don't know how much has actually spilled but it seems to be contained at this point. It has a negative impact but it's a relatively small impact," Macquarie analyst Jason Gammel said.

Traders downplayed the impact of the shutdown at Gannet, which Shell co-owns with U.S. major Exxon , on oil supplies, saying that it was a small field and would not cause much disruption.

The oil sheen from the leak 180 km off the coast of Aberdeen covered an area of around 37 square km, said Shell's spokesman.

Environmental groups Greenpeace and the Royal Society for the Protection of Birds (RSPB) complained about the lack of information on the leak.

"Currently thousands of young razorbills, puffins and guillemots are flightless and dispersing widely in the North Sea during late summer. So they could be at serious risk if contaminated by this spill," Stuart Housden, director of RSPB Scotland said in a statement emailed to Reuters.
A spokesman for the Scottish government said fishing boats continued to operate.

"It hasn't had much of an impact other than Marine Scotland has notified fishing vessels that fish within that area to stay clear of the affected area," he told Reuters.

Government data showed that there was a reduction in the number of significant hydrocarbon releases in UK waters in the 2010-2011 period compared to the prior year, although a parliamentary report in January questioned the country's readiness to tackle a major oil spill.

Shell said it plans to issue a further statement about the leak later on Monday.

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http://www.foxbusiness.com/markets/2011/08/15/uk-government-shell-oil-leak-substantial/